Poor monsoon rains in India throughout June-August pose a risk to the country’s domestic soyabean and peanut production. The Indian Meteorological Department estimates cumulative June-August rains at 10% below historical averages, with just one month left in the rainy season.
2021/22 marketing year (MY) production for soyabeans and peanuts is likely to fall from the 9.2 million tonnes and 5.4 million tonnes made respectively in 2020/21. This decline could potentially pave the way for increased palm oil imports from Indonesia and Malaysia to compensate for the deficit in domestic vegetable oil availability. India typically relies on imports for around 70% of its annual edible oil supply, but with poor conditions in Gujarat (largest domestic peanut grower) and Madhya Pradesh (largest domestic soyabean grower) throughout the month, this number could be boosted. Gujarat, in particular, has had 47% lower rainfall than average so far.
India is currently forecast to import 8 million tonnes of palm oil in the 2021/22 marketing year (Nov’21-Oct’22); however, this number will likely rise if poor production is realised. This would mean price increases for Malaysian and Indonesian palm oil prices, which have already climbed by 20.6% and 20.5% since the beginning of July to USD 1,022/MT and 1,205/MT on August 25th.